Newell Rubbermaid Inc.
), the producer of Sharpie pens and Rubbermaid containers,
remains on our Neutral list as the company continues to post
robust quarterly results, impressive fiscal 2013 forecasts and
continues to grow through its ongoing Project Renewal program.
However, we remain concerned regarding the increasing material
costs, intense competition and slowdown in housing and remodeling
Fourth-quarter 2012 earnings of 43 cents per share at Newell
exhibited an improvement of 7.5% from the comparable year-ago
quarter as well as the Zacks Consensus Estimate of 42 cents.
Earnings gained mainly from the positive impact of pricing and
productivity and lower structural selling, general and
administrative expenses as a percentage of sales, partially
offset by higher input cost inflation.
It is to be noted that the company has a history of beating
Zacks Consensus numbers. The company has consistently posted
positive surprises in the past several quarters. The average
positive surprise in the trailing four quarters comes to
Buoyed by strong quarterly results, management now anticipates
core sales growth of 2%-4% and adjusted earnings in the range of
$1.78-$1.84 per share for fiscal 2013. Moreover, Newell expects a
20 basis points improvement in operating margin during fiscal
Further, we believe that Newell's Project Renewal program will
help it reduce operating costs and complexity of the
organization, while also increase investments in the most
important growth areas within the business. It is expected that
the company will be saving a cumulative $270-$325 million
annually from the middle of 2015.
On the flip side, the company operates in a competitive
environment and strives to maintain its market share, actively
competing with numerous manufacturers and distributors of
consumer and commercial products. The company's primary traits to
compete in the environment include focus on pricing, big consumer
brands, introduction of new products, and customer service.
While our recommendation on Newell rides on the various
positives mentioned above, soft economic recovery, threats of
competition and foreign currency translation, keep us on the side
lines. The company retains a Zacks Rank #3 (Hold).
Other Stocks Worth Considering
Other stocks worth considering in the housewares and
accessories industry are
Avery Dennison Corporation
Tupperware Brands Corporation
). Avery has a Zacks Rank #1 (Strong Buy) while Jarden and
Tupperware carry a Zacks Rank #2 (Buy). The stocks are expected
to continue with their upbeat performance and sustain their
positive earnings surprise trend.
AVERY DENNISON (AVY): Free Stock Analysis
JARDEN CORP (JAH): Free Stock Analysis Report
NEWELL RUBBERMD (NWL): Free Stock Analysis
TUPPERWARE BRND (TUP): Free Stock Analysis
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